When the leading AKP holds its party congress in the next 15 to 20 days to select a new leader, Davutoglu will not run, CNN Turk has reported.

News that Davutoglu will not contest the leadership elections and will announcie his resignation at 11am (0900 GMT) on Thursday comes amid mounting tensions between Davutoglu and Turkish President Recep Tayyip Erdogan.

A rift had reportedly grown between the two AKP leaders following the June 2015 elections when their party failed to win an overall majority.

At the core of the dispute, according to an Arabi21 report citing Turkish sources, were Erdogan’s decision to appoint people from outside of the AKP into the party’s top leadership and also planned constitutional changes that will give Erdogan an empowered presidency.

Earlier this week, Davutoglu’s authority to appoint regional AKP officials was removed and, in a speech to AKP deputies on Tuesday, the prime minister said he would rather leave any position than hurt the party, Reuters reported.

Erdogan has recently made public statements that appeared to target Davutoglu, including commenting such a big deal out of the agreement that granted Turkish citizens visa-free travel to the EU – a plan that Davutoglu championed as a major victory – was an exaggeration.

On Wednesday, Erdogan made a cryptic statement saying, “People should not forget how they attained their position.” His comments were widely interpreted as a dig at Davutoglu who rose rapidly through the ranks of the AKP from advisor to foreign minister to prime minister.

Rumours in recent days that Davutoglu planned to resign have rattled financial markets, causing the lira to nosedive from 2.79 to the dollar earlier in the day to 2.94.